babu bharathi 08 March 2021

Non C T S Cheque

if the cheque was returned as Non CTS instrument ,then it comes punishable under section 138 of N I Act or not?

Quick Summary

This discussion clarifies whether a Non CTS cheque returned by a bank is punishable under Section 138 of the Negotiable Instruments Act. While a cheque remains legally valid, Section 138 is specifically applicable only when a cheque is returned due to insufficient funds. Non-CTS compliant cheques, which are no longer processed for clearing since January 1, 2019, do not fall under the purview of Section 138.

3 Replies

G.L.N. Prasad (Retired employee.) 09 March 2021

The reason mentioned by the drawee bank for returning the cheque holds good and those CTS cheques can be presented by the banker across the counter by the collecting banker. A cheque is always a cheque legally, and the modes of payments are laid down rules for presentation may be different. If the cheque is returned with the reason "Refer to drawer" or "Inadequate funds" are the reasons to reckoned for the failure of drawer in failing in his commitment.